(Alliance News) - Stocks in London are set to open lower on Wednesday, as investors braced for US Federal Reserve Chair Jerome Powell to continue his testimony in front of the House of Representatives after delivering hawkish comments to the Senate on Tuesday.
IG says futures indicate the FTSE 100 index of large-caps to open 20.58 points lower, or 0.3%, at 7,898.90 on Wednesday. The FTSE 100 index closed down 10.31 points, 0.1%, at 7,919.48 on Tuesday.
Powell on Tuesday said US interest rates will likely peak at a higher level than previously anticipated due to economic data coming in stronger than recent trends suggested.
He noted that January figures for employment, consumer spending, manufacturing production and inflation pointed to a partial reversal of earlier softening trends.
"If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes," he said.
Danni Hewson, head of financial analysis at AJ Bell, said: "He didn't say anything surprising or anything we didn't know already, but there was a steely quality to his testimony today and no sign of the dove some investors had been hoping to see fly. It's made markets nervous, with that new year optimism now thin on the ground and today's comments pretty much obliterating it for now."
Wall Street ended sharply lower in the wake of Powell's initial testimony on Tuesday, with the Dow Jones Industrial Average down 1.3%, the S&P 500 down 1.5%, and the Nasdaq Composite down 1.3%.
The dollar rose against rivals as markets price in US interest rates staying higher for longer.
Sterling was quoted at USD1.1825 early Wednesday, lower than USD1.1861 at the London equities close on Tuesday and USD1.2031 at the close on Monday.
The euro traded at USD1.0536, lower than USD1.0577 late Tuesday. Against the yen, the dollar was quoted at JPY137.67, higher versus JPY136.87.
In Asia on Wednesday, stocks were largely lower, though the Nikkei 225 index was up 0.5%. In China, the Shanghai Composite was down 0.3%, while the Hang Seng index in Hong Kong was down 2.2%. The S&P/ASX 200 in Sydney closed down 0.8%.
Brent oil was trading at USD83.31 a barrel early Wednesday, down from USD83.83 late Tuesday. Gold was quoted at USD1,812.85 an ounce, down from USD1,818.73.
In Wednesday's corporate calendar, there are full-year results from insurers Admiral and Legal & General and from wealth manager Quilter.
By Heather Rydings, Alliance News senior economics reporter
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